Berjaya Sports Toto (BUY) from HLIB Research

Berjaya Sports Toto (BUYçè)

Revisiting BToto’s STM-Trust

§ With management’s yield expectation of 8% and 100% payout, we arrived at an indicative price of 48.4 cents/unit.

§ BToto is valued at RM4.47/share with effective stake of 87.6% in STM-Trust post its listing in Singapore.

§ BToto’s stake would be diluted to 29.4% after the secondary listing of the trust in Malaysia, which then BToto’s FV would be adjusted to RM1.74/share (or RM1.57 with 10% holding company discount).

§ We calculated that shareholders could enjoy a total gain of RM0.66-0.69/share upon the completion of both exercises.

§ Aside from the gain, our positive view is further strengthened andrecent share price weakness is an opportunity,given that shareholders would have direct interest in the operating company with 7-% yield, while some shareholders may not have the mandate to hold shares in Singapore, these investors would have sold down their exposure which contributed to the recent price weakness.

§ Hence, wemaintain BUY on BToto with unchanged TP ofRM4.67 based on SOP valuations.